Katrina likely to increase diesel prices

According to the U.S. Department of Energy, the average price of a gallon of diesel fuel increased again in the week ending Aug. 29, from $2.588 to $2.590.

The $0.002 increase was enough to set a new record but was small compared to the increases of the past few weeks.

Diesel prices are expected to jump later this week, however, because of the damage Hurricane Katrina did to Gulf of Mexico refineries, said Chris Lee, ProMiles marketing director.

“It will be directly related to how much of a disruption of shipping traffic there was because of Hurricane Katrina,” Lee said. “Luckily, it looks like the impact may be minimized because Katrina went ashore at the Louisiana-Mississippi coast, as opposed to further west.”

Had the storm hit the southeast Texas coastline, the resulting price increase would have been much larger because that area has even more refineries, Lee said.

Historically, fuel prices decrease in September, but that may not happen this year. “With the price per barrel still increasing, I’m not sure we’ll see that annual decrease as we have in past years.”

For the week ending Aug. 29, the day Katrina came ashore, the Rocky Mountain region saw the biggest diesel fuel price increase, from $2.679 to $2.726. The price in the Midwest and Gulf Coast regions actually fell slightly, to $2.532 and $2.508, respectively.

For state-by-state diesel prices updated daily, click here.

–Lance Orr